How To Hit A Home Run Trading Commodities In Uncertain Economic Times (NYSEARCA:JO)

Baseball player taking a swing with cloud background

Tomwang112/iStock via Getty Images

Regarding current trading: patience, patience, patience amid global economic uncertainty, bearish chart patterns in some commodities, a stronger dollar, the war between Russia and Ukraine, and mixed weather signals.

However, two trades were home runs recently for customers of my Weather Wealth Newsletter, potentially yielding thousands of dollars per contract win since mid-September, and my most confident in my weather spiders for the last 4 weeks. They were natural gas (UNG) and coffee (YES).

natural gas

Jim Roemer’s call last September for a sell-off in natural gas prices (Weather Wealth Newsletter)

1) I’m not a genius, I’m smart in certain places and stay close to these places:

I would like to share my insights from 38 years of observing markets and how they react to the weather at “certain times of the year”..”

For example, my highest confidence trades in corn (CORN) and soybeans (SOYB) are almost always in late spring and summer and during the North American harvest season. I also happily recommend grain markets in December-February knowing traders are keeping a close eye on the South American weather.

For markets like coffee, the weather is a critical time (now) during the early stages of the Brazilian harvest cycle: usually between October and December.

That’s why I went against the bullish crowd over coffee about a month ago. Take a look at the great early coffee blooms in Brazil due to the rain I predicted for the Brazilian spring three months ago.

2) Be wary of overvalued markets:

Some of the most successful investors, like Warren Buffett and Ray Dalio, are looking for opportunities that others aren’t finding.

In other words, catch certain industries early before the crowd and sell in panic and greed.

Read  How to Find Aether Biome

Here, too, it was important to me, in the case of the strongly rising natural gas (KOLD) and coffee markets, to look into the future at past fundamental data and to anticipate a “change in fundamental data” at an early stage. I can do that best.

Could this trade be the next home run?

This could be a potential “home run” trade this winter if the weather is warmer than normal in both the US and Europe. That would be the purchase of gasoline and the sale of heating oil against it. In winter, a lack of snowfall and the approaching holiday season would allow for more motoring (gas demand), while warm weather affects fuel oil demand.

But right now, amidst the geopolitical situation, ideas about freeing up oil reserves and various reports of OPEC cuts in order to “hang” them on the US are all major factors in fuel price volatility.

Due to data protection concerns from some major customers, I am unfortunately unable to advise on this market this winter.

Gasoline and heating oil prices

Gasoline Fuel Oil Spread (barchart.com)

Conclusion:

There are still plenty of trading opportunities in commodities that La Nina and global weather patterns will offer both experienced and novice investors this winter. Recently, with all the bullish hype, two of my best trades were short, both coffee and natural gas, with potentially huge profits for clients who listened to my advice.

I continue to see a warm early winter (worldwide) and better weather conditions for Brazilian coffee. However, it is not advisable to sell the hole now unless using a variety of option strategies.

Read  How to stop connection harvesting on LinkedIn

The key is to always look for markets that are overbought or oversold when speculators are biased too much in one direction. This is when you can potentially hit a home run, as my recent gold blog teaches in my newsletter Trader.

How to hit a home run when trading commodities

Jim Roemer’s Gold Blog at Weather Wealth (www.bestweatherinc.com)

Leave a Comment

Your email address will not be published. Required fields are marked *